DirecTV said Thursday it has filed a lawsuit against the Mesa-based Eagle West Communication cable television company and several individuals and other companies alleging they fraudulently redistributed DirecTV programming to thousands of customers over their cable systems.
Also, the Federal Bureau of Investigation searched 21 offices and transmission locations of Eagle West and another cable company, Phoenix-based Indevideo Co., seizing records and transmission equipment related to the case.
As a result of those raids, customers of the two companies lost their cable TV service, officials of the two companies said.
Al Williams, owner of Indevideo, denied wrongdoing, saying he was authorized to retransmit DirecTV programs to his customers and was paying the El Segundo, Calif.-based satellite TV company for those rights.
Ernest McKay, vice president of operations for Eagle West Communications, declined to comment on the charges because of the prospect of litigation.
McKay, Williams and Paul LaBarre, another principal in Eagle West, were among the individual defendants named in the civil suit.
In the complaint filed in U.S. District Court in Phoenix, DirecTV said the defendants set up as many as 12 fraudulent SMATV (Satellite Master Antenna Television) accounts through Hotel Movie Network to resell DirecTV's programming through the Eagle West and Indevideo cable systems.
The satellite company said it strictly prohibits the resale or retransmission of DirecTV programming.
According to the complaint, LaBarre created SMATV accounts using fictitious business names and set up transmitters at undisclosed locations where the signals were resold and rebroadcast to residential customers. In one instance, a SMATV account was set up at a lodge in Tusayan that had been torn down, the suit company said.
SMATV systems typically are used in businesses or institutions like hotels, hospitals and college dorms to provide programming only to multiple rooms within the same building, the satellite company said.
"We will continue to be relentless in our pursuit of those who attempt to defraud DirecTV and the public by reselling or rebroadcasting our programming," said Jim Whalen, the satellite company's vice president of signal integrity.
DirecTV spokesman Robert Mercer said the company will seek damages up to $100,000 for each violation.
Indevideo's Williams said he had an agreement with DirecTV that spelled out how the signal was to be used. He added that he was up to date in paying his bill to DirecTV.
"They (DirecTV officials) were the ones that authorized the receivers," he said. "If they thought it was going to be used illegally, they had the option of turning them off at any time."
He said the FBI raids probably will permanently put his company out of business regardless of the outcome of the legal case.
"Customers want their TV service, and if it's interrupted, they will go elsewhere," he said. "The investigation completely puts you on your knees. They took all of our receivers. That's the verdict. I've already been found guilty."
He said he will seek permission to resume operations when he speaks to FBI investigators Friday. But he added he's not optimistic.
"With the amount of papers and computers they took out of our office, I cannot imagine them looking at all of it by (Friday)," he said.
Indevideo, which was formerly headquartered in Mesa, serves about 500 customers at the Grand Canyon, Tuba City and Spring Valley.
Eagle West's McKay also doubted his company will ever be able to resume service. As customers entered his office Thursday, we was advising them to seek other TV program providers.
"We're in a controlled close-down right now," he said.
Eagle West served several thousand cable TV customers in Mesa and rural communities of Arizona.
"We would like to apologize to our customers," he said. "We have had loyal customers, and we are sorry we couldn't continue providing service to them."